Bourse steady at 1-1/2 year high after rate cut

Saturday, 11 May 2013 00:00 - - {{hitsCtrl.values.hits}}

Reuters: Shares rose for the seventh straight session on Friday to hit a 1-1/2 year high, led by blue chips, retail buying and foreign buying, boosted by rate cuts by the Central Bank to spur growth.

The Central Bank cut its key monetary policy rates by 50 basis points before the market opened on Friday, following some of its regional peers, to boost economic growth in the face of subdued demand.

“The rate cut was good news for the market and the retail activities continued,” a stockbroker said on condition of anonymity. The main stock index edged up 0.18%, or 11.29 points, to 6,250, the highest close since 11 November 2011.

The market has gained 8.2% since Treasury Secretary Dr.P.B. Jayasundera and the Central Bank said interest rates could ease in May-June.

The rate cut came despite comments from the International Monetary Fund last week that Sri Lanka must not ease monetary conditions as inflation remained a concern, even though prices rose at a slower pace in April than the previous month.

Turnover was Rs. 1.47 billion ($ 11.68 million), well above this year’s daily average of Rs. 1.03 billion.

Foreign investors were net buyers of Rs. 285 million of shares, extending the net foreign inflow so far this year to Rs. 9.6 billion. Last year, the Bourse saw a net inflow of $ 303 million.

The rupee edged down to 126.23/28 per dollar, down from Thursday’s close of 126.00/10, on importer demand for dollars, currency dealers said.